Immigration leads to lower wages?

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matt_brown67
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#1
Report Thread starter 8 years ago
#1
Hi,

Sorry in advance if it seems a silly question.

Could some one please explain to me in academic terms if, and how, the above statement is true?

I obviously understand that immigration increases competition for jobs, but am struggling to make the link between more competition and lower wages? Particularly as there is obviously a minimum wage threshold in place.

Any responses will be appreciated,

Thanks,
Matt
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username402722
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#2
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#2
I think that immigration has avoided wages having to rise more to fill some hard to recruit positions. I know that bus companies around the mid noughties had problems recruiting bus drivers and Polish recruitment helped.
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matt_brown67
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#3
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#3
So is it more of a case that immigration may halt, or slow down, any wage increases...instead of actually lowering wages.

If that's the case it makes a lot more sense,

Cheers
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Martyn*
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#4
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#4
All companies have to pay minimum wage, so even if an employer or company wishes only to employ newly arrived immigrants they would still need to pay them the minimum wage because that it is the law. If the worker is working in superstores and shops it is likely that they will be paid the legal wage amount, but they may be asked to work extra hours without pay. If they are woking in pubs, bars and restaurants the employer may be paying them less than the minimum wage, with the effect that they will be doing more hours than they get paid for.
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nulli tertius
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#5
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#5
However the relationship between wage levels and immigration is more complex than this. Immigration contributes to economic growth. That increases the demand for labour in the economy which pushes up wage rates.

Effectively immigration reduces wages for what immigrants do but increases wages for supplying what immigrants need.

Hence immigration always produces winners and losers.
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MagicNMedicine
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#6
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#6
As nulli tertius says immigrants have a supply impact (they work) and a demand impact (they consume and spend). Also they don't necessarily replace native workers one for one: immigrants are doing work that natives wouldn't otherwise done, either because they have brought a different skill set, or because they are doing jobs that natives didn't want to do.

You would expect to see a wage effect if migrants are coming over with the same skill set as native jobs competing for the same jobs, this will lower firms labour costs and so could allow them to increase production, or it might make them use more labour-intensive (rather than capital-intensive) production techniques so over time they hire more workers as workers are relatively cheaper. So over time if you did get a short-run fall in wages, as production expands that can mean employment increases too so more people get hired which is how the economy would absorb the increased labour supply.

But also on the supply side some types of labour compliment each other (eg high-skilled / low-skilled) so if you aren't able to produce something because of a shortage of high-skilled workers, and then they become available, you can start to produce in those areas, which will also mean low-skilled workers that work in those areas get hired as well. So it can have positive labour market effects for natives too.

You get some people saying by default "immigrants are driving down wages" but the UK has a minimum wage which also acts as a wage floor and stops wages adjusting downwards to what would otherwise be an equilibrium so this doesn't really hold. Ironically, a lot of the politicians that say immigrants are driving down wages are also the same ones that say we should scrap the minimum wage because it's costing jobs because wages can't fall enough.....you can't have it both ways.

There have been a lot of academic studies to see whether immigration to the UK has actually had a negative wage effect: the summary tables on pages 66 to 68 of this Migration Advisory Committee paper summarise them. In general there are no real wage effects in the UK from immigration, some papers find very small effects that change slightly with the income distribution (increase wages for higher paid natives, reduce for lower paid) but the effects are pretty small.
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El Salvador
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#7
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#7
With more immigrants there are more workers in the labour market. With supply going up, wage drops.

But it's actually difficult to tell and you will need to look at several factors. Demand for more goods, for example, also goes up because of a higher population.

Then there's the extra production brings in by immigrants.
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imtelling
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#8
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#8
It's economics 101 .

If you have a surplus of goods prices come down. If you have a surplus of labour wages come down.

mass immigration us a vicious free market capitalist policy. The whole purpose of mass immigration is to flood the job market with cheap exploitable labour.
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nulli tertius
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#9
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#9
(Original post by imtelling)
It's economics 101 .

If you have a surplus of goods prices come down. If you have a surplus of labour wages come down.

mass immigration us a vicious free market capitalist policy. The whole purpose of mass immigration is to flood the job market with cheap exploitable labour.
But the brighter folk then do economics 201 where they learn what MagicNMedicine has just explained.
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imtelling
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#10
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#10
The fundamental flaw in that argument is that immigrants are not coming over with different skill sets though.

btw, I should point out I support immigration if it is targeted. That is to say targeted at specific job shortages. Its just that mass immigration is a regressive policy which makes the people already here compete dog eat dog for jobs and resources so big business can make a quick profit.
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nulli tertius
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#11
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#11
(Original post by imtelling)
The fundamental flaw in that argument is that immigrants are not coming over with different skill sets though.

btw, I should point out I support immigration if it is targeted. That is to say targeted at specific job shortages. Its just that mass immigration is a regressive policy which makes the people already here compete fog eat dog for jobs and resources so big business can make a quick profit.
You try and recruit Brits to harvest crops by hand.
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matt_brown67
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#12
Report Thread starter 8 years ago
#12
Thank you for all replies, very useful.

As I said in OP,I am aware that due to minimum wage, but some arguments I have read on the issue seemed to actually be claiming wages, even for low paid jobs, would drop from current levels.

I just wanted to confirm that my thinking was right, and that the minimum wage level would not be lowered.

I guess I should choose my sources better!

Thanks once again
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imtelling
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#13
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#13
(Original post by nulli tertius)
You try and recruit Brits to harvest crops by hand.

Try paying a decent wage then and it wouldn't be a problem.

Also, you do realise there is massive unemployment in the settled immigrant communities? Why aren't these people harvesting the crops?
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imtelling
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#14
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#14
(Original post by matt_brown67)
Thank you for all replies, very useful.

As I said in OP,I am aware that due to minimum wage, but some arguments I have read on the issue seemed to actually be claiming wages, even for low paid jobs, would drop from current levels.

I just wanted to confirm that my thinking was right, and that the minimum wage level would not be lowered.

I guess I should choose my sources better!

Thanks once again

It doesn't lower minimum wage because minimum wage is an artificial construct created by government.

But, wages higher than minimum wage either stagnate or decline because of the saturation of the job market.
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akash11
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#15
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#15
Immigration in the long run saves jobs, it globalization that's killing this countries economy
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Heliosphan
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#16
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#16
(Original post by imtelling)
Try paying a decent wage then and it wouldn't be a problem.

Also, you do realise there is massive unemployment in the settled immigrant communities? Why aren't these people harvesting the crops?
Because once an immigrant passes a residency test they become entitled to certain benefits and therefore less inclined to do some of the less desirable jobs.
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Dylann
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#17
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#17
If immigration leads to a higher population (which it often does) it means the competitiveness for jobs increases. With an increase in job demand, employers can lower wages to cut costs. The employee cannot really argue against this, as there are 15 other (perfectly capable) people who could do the same job for a lower wage.

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imtelling
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#18
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#18
(Original post by Heliosphan)
Because once an immigrant passes a residency test they become entitled to certain benefits and therefore less inclined to do some of the less desirable jobs.

Exactly. So, why Britain is importing over hundreds of thousands of immigrants every year when the end result is mass unemployment is beyond me.
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DarthVador
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#19
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#19
(Original post by matt_brown67)
Hi,

Sorry in advance if it seems a silly question.

Could some one please explain to me in academic terms if, and how, the above statement is true?

I obviously understand that immigration increases competition for jobs, but am struggling to make the link between more competition and lower wages? Particularly as there is obviously a minimum wage threshold in place.

Any responses will be appreciated,

Thanks,
Matt
Immigration lowers wages for low skilled and high skilled workers while workers in the middle do not see their wages change by much. This is because in the modern globalised economy, highly skilled workers are highly mobile but at the same time we have seen a massive movement of unskilled uneducated workers from the third world into developed economies. This is grounded in economic theory as well, for what that's worth.
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uktotalgamer
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#20
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#20
Minimum wage leads to lower wages..
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